FocusAsian 2013 hydrous ethanol prices to rise on low supply

02 October 2012 07:35  [Source: ICIS news]

By Andrea Heng

Asian 2013 hydrous ethanol prices to rise on low supplySINGAPORE (ICIS)--Asia’s prices of hydrous ethanol will start 2013 on a high note following a flat line in the last quarter of this year, on the back of lower availability and firmer prices from major supplier Brazil, market sources said on Tuesday.

Brazil, which is Asia’s largest supplier of sugarcane-based ethanol, is likely to offer cargoes at higher prices because producers there are planning for fewer exports compared to 2012, despite a forecast of stronger feedstock crop yields for 2013.

According to estimates by UNICA, the Brazilian Sugarcane Industry Association, the country will harvest 3.21% more sugarcane year on year at 509,000 tonnes in 2013, but the percentage of crops for refining into ethanol instead of sugar will drop to 51.25% from 51.56% in 2012.

Brazil’s ethanol exports, part of which go to Asia, are expected to be reduced by 8.11% in 2013, the UNICA data showed.

Offers heard during the week ended 1 October were higher week on week at $700-705/cbm (€539-543/tonne) CFR (cost & freight) northeast (NE) Asia, a trader said.  

Meanwhile, prices are expected to remain largely stable for the rest of 2012 as key importers Japan and South Korea are comfortably stocked while small volumes totalling 30,000-40,000cbm of B-grade ethanol in storage at Ulsan port in South Korea will be sufficient to meet short-term requirements.

B-grade ethanol is a variant of hydrous ethanol that is used in the manufacture of alcoholic beverages and is widely traded in Asia.

Hydrous ethanol prices were assessed at $670-690/cbm CFR NE Asia during the week ended 19 September, unchanged week on week, according to data from ICIS.

Market players are awaiting fresh offers from Pakistan and Thailand for the first quarter of 2013, in anticipation of the new crop season in both countries in November.

However, the current market landscape is expected to change as Pakistan awaits a duty-free policy in Europe, which will encourage higher exports to the region, while Thai producers are planning to focus on fuel or anhydrous ethanol production in anticipation of the government’s impending fuel ethanol mandate.

($1 = €0.77)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Andrea Heng
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